Yesterday’s Market Wrap
In the last several days, we have seen the market turn away from almost all assets and we have seen some very strong bids in the USD, which has surged higher. The odds of the FED raising rates by 0.75% (basis points) yesterday instead of 0.50% increased toward 90% in recent days, especially after the higher consumer price index (CPI) in Friday’s report. Prices rose 8.6% year-over-year compared to 8.3% expected.
But yesterday we saw USD bulls take their foot off the gas pedal during the European session and risk currencies such as the NZD and the AUD took advantage. The FED increased rates by 75 bps, which sent the USD higher initially, but we saw a reversal and a relief rally on risk assets, which means that the USD ended the day lower, despite the major hike.
The Data Agenda Today
Today markets are still trading the aftermath of yesterday’s FED rate decision and will continue for some time, but the economic calendar is full today as well. The Q1 GDP report from Canada showed a considerable slowdown last quarter while the unemployment report ticked lower in Australia.
Swiss National Bank (SNB) left interest rates unchanged at -0.75%, waiting for the ECB to make a move, since it is trying to peg the CHF and its policy to the Euro. In the US session, we have the Philadelphia manufacturing activity as well as unemployment claims, but before that the Bank of England (BOE) is expected to deliver the fifth rate hike in a row and take them to 1.25%.
Yesterday the volatility continued, although it was both ways this time. We took advantage of that price action and opened six trading signals, one of them in Gold, one in Bitcoin and four in forex. We ended up with four winning signals at the end of the day, which is pretty good, considering the volatility on both sides.
GOLD – Buy Signal
Gold turned bearish in early March after it pushed above $2,000 on the Ukrainian conflict. Since then the trend has been bearish and Gold has lost the safe haven status and at some point, it fell below $1,800. Although, my colleague Arslan opened a buy signal above the previous low and we booked profit as the price moved up to the moving averages.
XAU/USD – H4 chart
USD/CAD – Buy Signal
This pair was bearish for about a month until the middle of last week, but reversed as inflation moved higher in the US last week and has been making some massive gains. We have been buying USD/CAD and yesterday before the FED rate hike we decided to open a buy signal at the 50 SMA (yellow) on the H4 chart, booking profit as the price bounced higher before the reversal down.
USD/CAD – 60 minute chart
Cryptocurrencies started slipping lower again last week, after consolidating for about a month since early May and they have broken below some important support levels. Ethereum, where we opened two crypto signals earlier this week, tested the $1,000 zone as it fell to $1,020 but closed the day at the highs. Bitcoin survived the $20,000 level after the price bounced just above that zone yesterday, so let’s see if cryptos will start to make a bullish reversal now.
Booking Profit in BITCOIN
Bitcoin turned quite bearish again after the decline resumed again in the crypto market. BTC headed for $20,000 and we decided to open a sell signal here during the bounce on Tuesday. We booked profit as the price returned to the $20,000 level yesterday, before the reversal higher.
BTC/USD – 60 minute chart
Ethereum Reversing Above $1,000
Ethereum broke below the stong support zone around the $1,700 level last week and continued to crash lower, until $1,090 on Monday. Although yesterday we saw a bounce which my colleague Arslan tried to catch it. He did well on one occasion but got caught on the wrong side on the other, so we had two Ethereum signals yesterday.
ETH/USD 60 minute chart